Lysander-Triasima All Country Equity Fund
Second Quarter Commentary

The Economy

COVID-19’s influence on economic activity has become largely immaterial by now. Notwithstanding, some impact was recently felt in China due to their zero-COVID policy shutdowns.

Inflation rose further in advanced countries to levels unexpected to most observers. A key reason for the elevated inflation is the rise in household wealth over the past two years and the consequent surge on spending for goods. Other causes include the tight labour market and lingering supply chain disruptions.

Central bankers stayed the course too long with their easy monetary policies and now must catch up by aggressively raising short-term interest rates. Mid- and long-term rates also rose further in the quarter.

The war in Ukraine carries on, limiting supply and causing prices to rise for energy in Europe and for foodstuff at large.

Growth in most countries is slowing due to the inflation headwinds and declining real disposable income. Some advanced countries started showing signs of recession late this quarter.

The World Equity Market

The MSCI All Country World Equity Index (CAD)* (the Index or the benchmark) lost 13.0% this quarter.

Weakness was broad-based with every sector posting a negative return. The main causes are high inflation and rising interest rates leading to fear of falling profits. The fall in the market so far is only due to an earnings multiples compression, since earnings estimates for 2022 are still rising.

The worst-performing sectors were Information Technology (-19%) and Communication Services (-16%), due to higher rates reducing growth stocks valuations, and the cyclical Materials (-17%) and the Consumer Discretionary (-18%) sectors.

The best-performing sectors were Energy (-2%) as well as Utilities (-4%) and Consumer Staples (-3%), both with defensive characteristics.

*The Index is comprised of equity securities of large- and mid-cap companies from developed
and emerging markets.

Lysander-Triasima All Country Equity Fund (the “Fund”)

Sector allocation contributed positively to relative performance, but security selection detracted value. The Energy overweight and the Information Technology underweight added value. The Real Estate and Financials sectors had a negative impact, but it was selection in Materials that was most detrimental to relative performance.

*Amazon was not held in the Fund’s portfolio but was in the Index during the quarter. Not holding Amazon had a positive impact on the Fund’s performance relative to the Index.

Sales exceeded purchases in the Fund’s portfolio this quarter, with the portfolio tilting away from cyclical and towards defensive sectors. The Financials, Materials, and Consumer Discretionary sectors were reduced and Consumer Staples, and Health Care, were added to.

The Three-Pillar Approach™

On the quantitative side, combining the Long and Short positions, the Fund’s portfolio has better parameters and factors exposure relative to the MSCI ACWI, with two exceptions. Profitability level is in line and revenue growth is lower.

The world equity market’s negative trend continued this quarter. Defensive factors such as dividends, value, and profitability outperformed the growth and volatility factors.

The fundamental background to world equities deteriorated further due to elevated inflation and rising interest rates. Slowing economies and lower expected corporate earnings point to poor outlooks in the short term and for 2022.

Lysander Funds Limited (“Lysander”) is the investment fund manager of Lysander-Triasima All Country Equity Fund (the “Fund”). Triasima Portfolio Management Inc. (“Triasima”) is the portfolio manager of the Fund. This document was prepared by Triasima as portfolio manager of the Fund. In this document, “we”, “our” and “us” means Triasima.

This document has been prepared solely for information purposes. Information in this document is not intended to constitute legal, tax, securities or investment advice and is made available on an "as is" basis. Neither Lysander nor Triasima make any warranty or representation regarding the information herein. Information in this document is subject to change without notice. Neither Lysander nor Triasima assume any duty to update any information herein. The MSCI All Country World (CAD) Index represents performance of the full opportunity set of large and mid-cap stocks across 23 developed and 24 emerging markets.

Certain information in this document has been derived or obtained from sources believed to be trustworthy and/or reliable. Neither Lysander nor Triasima assume responsibility for the accuracy, currency, reliability, or correctness of any such information.

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This document may contain forward-looking statements. Statements concerning a Fund’s or entity’s objectives, goals, strategies, intentions, plans, beliefs, expectations, and estimates, and the business, operations, financial performance, and condition are forward looking statements. The words “believe”, “expect”, “anticipate”, “estimate”, “intend”, “aims”, “may”, “will”, “would”, and similar expressions and the negative of such expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward- looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from current expectations. Readers are cautioned not to place undue reliance on these forwardlooking statements. While Lysander and Triasima consider these risks and uncertainties to be reasonable based on information currently available, they may prove to be incorrect.

Nothing in this document should be considered a recommendation to buy, sell or short a particular security. Any specific securities discussed are intended as an illustration of the portfolio manager’s security selection process. The portfolio manager may sell these securities at any time, or purchase securities that have previously been sold. The positions may increase or decrease in value after the date hereof, and the portfolio that hold such positions may accordingly gain or lose money on the investment. The statements by the portfolio manager in their commentaries are intended to illustrate their approach in managing the portfolio and should not be relied upon for any other purpose.

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